# Tag: interest rate

### Federal Funds Rate

See Also: Interest Rate Swaps LIBOR Interest Rate Definition Interest Rate Risk Prime Lending Rate Libor versus Prime Rate Interest Rate in Selecting Loan Federal Funds Rate Definition The federal funds rate definition, or fed funds rate, is the target interest rate for overnight lending and borrowing transactions between banks. The Federals Open-Market Committee (FOMC)

### Equity Interest Definition

See Also: Brand Equity Return on Common Equity (ROCE) Return on Equity Analysis Carried Interests Equity Interest Definition Equity interest, defined as the amount of equity a single person holds in a business, is a common concept to the small business world. For example, if an angel investor receives 25% ownership of a company, the

### Effective Rate of Interest Calculation

See Also: What is Compound Interest When is Interest Rate Not an Important in Selecting a Loan? Nominal Interest Rate Interest Rate Swaps Fixed Interest Rate vs Floating Interest Rate Effective Rate of Interest Calculation Definition An effective rate of interest calculation is the actual cost of a loan. It is the total amount of interest

### Discount Rate

See Also: EBITDA Definition Cost of Capital Funding Arbitrage Pricing Theory Capital Budgeting Methods Required Rate of Return Discount Rate Definition The discount rate definition, also known as hurdle rate, is a general term for any rate used in finding the present value of a future cash flow. In a discounted cash flow (DCF) model,

### Coupon Rate Bond

See Also: Common Stock Company Valuation Convertible Debt Instrument Covenant Definition of a Bond Contract Long Term Debt Non-Investment Grade Bonds Owner’s Equity Par Value of a Bond Preferred Stocks Coupon Rate Bond Definition The coupon rate bond is the annual interest rate the issuer pays to the bondholder. The rate is expressed as a percentage of the bond’s

### Basis Points

See Also: Accounts Payable Margin vs Markup Collateralized Debt Obligations Are You Collecting Business Data? Benchmarking A basis point is one hundredth of a percentage point. A single basis point would look like this: 0.01%. Fifty basis points is a half a percentage point: 0.50%. 100 basis points equal one percentage point: 1.00%. When To Use Basis

### Annual Percent Rate (APR)

See Also: Effective Rate of Interest Calculation Fixed Interest Rate vs Floating Interest Rate Interest Expense Carried Interests Annual Interest Rate Definition The Annual percentage rate (APR) of a loan is the yearly interest rate expressed as a simple percentage. A bank or lender quotes the rate or APR. The annual percent rate does not incorporate

### Binomial Options Pricing Model

See Also: Intrinsic Value- Stock Options Common Stock Definition Preferred Stocks Dispersion Risk Premium Binomial Options Pricing Model The binomial options pricing model is a tool for valuing stock options. Starting with certain given values, and making certain assumptions, the model uses a binomial distribution to calculate the price of an option. The binomial method